Montana
University System Operating Budgets ITEM 124-108-R0904Montana
University System Operating Budget

Rod Sundsted indicated there were corrections
to the budgets due to some pages being in the wrong areas.He handed those corrected sheets around.He thanked Pam Joehler for her efforts on the budget since this was her
first time through.She did a great job, and the light in her office was not off more than
three hours a night.Regent Semmens commented he has served on corporate, non-profit, and
state boards and has never seen such a useful presentation of a budget.It is an exceptional document with a very meaningful presentation.He thanked Rod Sundsted and the campuses, and offered kudos and thanks.

Rod
Sundsted
noted the Executive Summary included tribal and community colleges.Also included were fund and program definitions.There was a report on negative fund balances across the system, as well
as the bonded indebtedness report for each campus and the funds for repayment.System and educational units included expenditures, revenue, FTE staff,
and other.There were summary schedules which were used more by OCHE.Campus summaries had detail used for the Executive Summary, followed by
budget metrics, with the common use of terms, enrollment expenditures, general
operating cost, cost of education, and targeted expenditures, per student
funding, and staffing ratios.Also included were the current year budget changes.Following were a variety of schedules for such things as current
unrestricted revenue, current unrestricted expenditures, faculty salaries, and
scholarships/fellowships.The three community colleges were included at the end.Pam Joehler then went through various details of the budget, from a
total MUS increase of 6.5% from FY04 to FY05,to decreased state support, increased enrollment, and built-in
assumptions such as $350,000 for Regent priorities, which has a current
balance of $217,000.Regent Semmens indicated he would request at least one additional
senior staff member for the Office of the Commissioner to be funded within the
priorities, or from the lump.He indicated the amount suggested seemed light when considering the
compensation and benefits.He requested the Commissioner, Rod Sundsted and Pam Joehler discuss the
viability of the proposed figures, and to present a better figure to the Board
the following day.Regent Mercer indicated he would like to see Regent Semmens work with
them to put together the proposal.He said that with a $900M operation, helping the Governor’s office,
and improving relationships around the state, the Commissioner needs a Chief
of Staff.Regent Foster said he was glad this came up.The Board has a very aggressive agenda for the Commissioner to
accomplish and the reality is that additional staff is required.

The
University of Montana

President
Dennison
introduced the new Chancellor from UM-Western, Richard Storey.President Dennison indicated they had approached their budget with
prudent and proactive management.There was a disappointing decline in non-resident enrollment, which
will be addressed with a greater investment in recruiting and marketing.The campus cut costs, fulfilled their quality commitment, and found six
more tenure track positions.They have made strategic increases with more money for the termination
account for retirements, and more graduate fee waivers.Performance retention is up, graduations are up, and the student
faculty ratio is 20:1.They were able to reach most of their targets with the exception of
O&M, but even that is in pretty good shape.Designated and auxiliary accounts are fine except for Athletics, which
is on schedule as approved by the Board.President Dennison indicated their challenges are utilities which are
up 89%, improvement in non-resident enrollment, and continued efforts for
modest salary increases.The affiliated campuses are part of the challenge with $2M transferred,
$1.5M in cuts across the board, and the one time only transfer from
auxiliaries.There is an increase of 200+ FTE covering added faculty, classified
staff, janitorial services, student services, personal services, health and
workers comp insurance and faculty retirements.The operating costs shown are most utilities.Instruction remains the highest, with the increase in student services
due to increased recruiting.CIS was also transferred into its own budget.President Dennison recommended against freezing salaries.

Chancellor
Gilmore
welcomed the Board to his campus.Performance measures at Montana Tech are good, with placement high with
a rate of 99%, enrollment increased in FY04 and they hope it increases again
in FY05.Student faculty ratio is 16:1.At the Colorado School of Mines it is 12:1.They have good freshman retention, and graduations are good, but
neither are what they want to see.Chancellor Gilmore said they had a low debt load but it had increased
dramatically since 1998 from $10,000 to $16,000.Contracts and grants are at about $11,000.They have increased faculty 3.67 FTE and staff 3 FTE, are still funding
the termination account, maintaining reserves for enrollment, managing bad
debt as best they can, and continue marketing.Challenges at Montana Tech are to reduce the transfer from Missoula,
which is down to $400,000 from $439,000.Tuition has increased substantially, but is still considered low.

Chancellor
Storey
indicated the FY05 budget at UM-Western was under serious pressure.They have unfilled vacancies, and the main challenges for his campus
are enrollment, utility costs, payroll increases which even with the small
increase allowed is costing $125,000 in new money, and finally general fund
support.With the Experience One programming enrollment is up 40% for freshmen
this year, but 1% overall, with applications from non-residents up for the
first time in many years.Tuition remains a good buy, but they may not be able to increase
non-resident tuition without pricing themselves out of the market.Chancellor Storey indicated they plan to continue the growth in the
block programs and marketing for enrollments.

Dean Hoyle
reported enrollment growth is down for the first time, but the enrollment
reserve is on target.However, they have not met their benchmarks.Designated and auxiliary funds are positive except for the cafeteria
which has reduced its deficit from $50,000 to $6500.Their challenges are the drop in enrollment, and increased utilities.They are surviving on some vacancy savings and $516,000 transferred
from Missoula.They anticipate enrollment will drop 30 by spring, which is a $95,000
shortfall in tuition.The outlook for FY06 at the Helena College of Technology is dependent
on increased enrollment.Tuition will also be an issue, as well as affordability and
accessibility.There will be increases in health care and utilities, and salaries must
also be increased.Dean Hoyle said they need additional revenue streams.

Regent Semmens
expressed amazement at benefits and insurance for staff.Rod Sundsted indicated the state contribution to health insurance rose
from $410 to $460 per employee which is a 12% increase. Regent
Semmens indicated to President Dennison that he appreciated that he had
clearly delineated in his budget where he had cut funds.Chair Mercer questioned the decline in contract personnel and increase
in part time faculty at Helena College of Technology.He asked Dean Hoyle if that was a way to save money.Dean Hoyle indicated that was a benefit, but it was unplanned.Two faculty took leave without pay over the past year, and they had two
retirements in office technology which also lost enrollment.Chair Mercer asked if protections against a shift from full time to
part time personnel was at the Board level, the university level, or the
campus level.President Dennison said he believed it was an issue left to the CEO of
the campus, followed by budget approval at the flagship campus and then the
Board.He indicated he had raised the same question about the decline in
dollars dedicated to instruction at the College of Technology, which is a very
significant issue.Chair Mercer stated he was very concerned and wanted to pursue this
issue.If enrollment drops and state support goes down, it could be a trend
leading to tuition increases.He sees deferred maintenance and shifting to temps, and asked if there
are other practices which are saving money but affecting quality, or if these
were the two big tools used.President Dennison indicated those were the two big ones, but there is
also the use of the contingency accounts which are drained.Chair Mercer said he has been hearing that people are breaking down the
doors, but there is no space and the campus needs to add room.He asked what was causing the drop in enrollment.Dean Hoyle indicated they have had 55 fewer agency referrals this year.Those tend to be full time students since they follow agency
guidelines.He believes there may be other factors as well.Regent Semmens noted that while other campuses increased their reserves
by only 2% to 2.4%, Dean Hoyle had more than doubled his.He asked if it was possible to put some of that into recruiting to
address the long term.Dean Hoyle indicated that is their holding tank, with earmarked dollars
being moved out at appointed times.Chair Mercer indicated a subject for later discussion is whether the
college of technology has reached its capacity in a couple of ways – needing
more room for students, or overselling.They need to define between the two scenarios.Commissioner Stearns asked if Dean Hoyle had waiting lists for some of
his programs.He replied they did for nursing, although they don’t have a formal
waiting list, with those taking their general education classes while they
wait for the program.Commissioner Stearns said Senator Baucus had held a press conference in
the CoT lab, indicating all those graduates go directly into good paying jobs.She asked Dean Hoyle if those employers had told him they would hire
all he could produce.He replied the machine shop and welding are full and providing good
paying jobs with the biggest suppliers of those positions being Summit Group
and Gateway Economic.A company out of Pocatello needs 150 machinists.

Montana
State University

President
Gamble
indicated they had used two year sustainability grants for the smaller
campuses rather than transfers.They have worked with MSU-Northern on their debt service and were able
to find some relief for FY04-05.There was direct assistance to the Great Falls College of Technology
which was compressed for space, and Bozeman picked up the costs of moving the
fire service training and nursing programs out.Bozeman also gave direct assistance to MSU-Northern by picking up the
costs on a boiler that had gone out.President Gamble indicated AES is exceeding its mission, but is
becoming less competitive due to the same constraints that are affecting the
campuses.They have lost three faculty to positions outside Montana.They have downsized to remain in budget, but are not able to provide
all the services they should.Two sessions ago, the state put aside $1M as a match to deal with
deferred maintenance at the stations.Efforts to raise the other $1M are now at $820,000, and MAES is doing a
fundraiser.The stations have been impacted greatly by utilities, fixed costs,
lower interest earnings, and the fact they must project sales of commodities
as part of state funding.They are highly stressed financially. However, a new agent has been
placed in a county that has not had one for 62 years.Since the Fire Service training has been moved off the Great Falls
campus, they must pay rent for the first time.The rent is covered partially by general fund, with the balance coming
from President Gamble’s office.The rent will need to be factored into future budgets.

Chancellor
Sexton handed
out a document detailing the budget process at MSU-Billings.He indicated the newest piece of equipment at the College of Technology
is twelve years old.He pointed out the challenges listed on page four which include fixed
costs and demographical changes.The Billings revenues and expenditures were listed on page five, with
general budgets from the general fund and metrics on page six.

Chancellor
Capdeville
gratefully acknowledged the assistance that President Gamble had provided to
the MSU-Northern campus.He indicated Northern has served northeast Montana and has started
upper division courses at the tribal colleges.The collaborative nursing cohort in Shelby will finish this year.They have made major investments in the infrastructure with completion
of IT, roof repairs, upgrades to campus buildings, and the beginning of new
construction.They are in the last year of reducing the deficits, and after FY06 will
gain $100,000 from finished debt payment.They have fiscal constraints, but put additional funds into recruiting
next year because of reduced enrollment this fall.They also added funds for retention.Challenges continue with less general fund, and raising tuition.Chancellor Capdeville said they have “hit the wall” on raising
tuition.This summer they were down 90 FTE, and this fall 75 FTE.He believes that by spring they could be down 120 FTE.He reported they have completed some of the Indian Education grants,
and are focusing more on the Tribals.There is a small enrollment at Stone Child of 120.Fort Peck is up with 150, so there is the possibility they could do
some collaborative programs with them.Chancellor Capdeville expressed the hope of engaging and finishing the
tribal four year degrees.At the end of this year, there were some reserves, but those will be
gone by the end of the year.He expects to cut personnel in FY05, but will have cohorts in Browning
and Medicine Hat.Administrative changes are reflected in the budget, with four colleges
being collapsed to two, and those Chair/Dean faculty members affected no
longer being administrators.There is a declining enrollment in the high line public schools, which
will impact the Northern campus.They have had three failed searches for faculty this past year, and
adjuncts are not available in small communities.Chancellor Capdeville stated that 12 people from John Deere had flown
in the previous day to interview their students, and they needed more than
Northern had available.

Dean
Moe
said they had some successes at the Great Falls College of Technology over the
past year.They had budgeted based on 10% increased enrollment which only came to
4.3%.They dropped 21% evening FTE, and 12% summer FTE.For the first time, they have more non-traditional than traditional
students.They have a 13.7% increase in FTE for the on-line courses.Sixty percent of those taking on-line courses also take classes on
campus and say the on-line classes are critical to their goals.Great Falls CoT offers dual enrollment credit classes to high school
students, and have helped 24 high schools teach SYSCO.There are high school faculty teaching at the College of Technology.Dean Moe indicated they had to double the pay in order to recruit
adjuncts, but have added four full-time faculty this year.Using a sustainability grant from President Gamble they invested
$74,000 to educate teachers to teach on-line, providing laptops, and faculty
to mentor them.Sixty percent now teach on line.She suggested they should be considering the acquisition of some school
district property next to the campus.They have had a turnover in staff, with many of the positions being
filled from inside the campus.The dental hygiene program had a separate allocation, but no operating
costs were included in thebudget.Great Falls has had to absorb those costs in their own budget.

President
Gamble
reported they anticipate healthy enrollment, and they have over double the
Native American freshmen.Quality measures are up, and retention is up from 70% to 73%.Bozeman has planned for a decrease in WUE of 100, and backfilled with
non-resident students with a good increase in revenue.There is a decrease in non-residentgraduate students which can’t be explained.Health costs will rise, as will utilities, library costs, and
scholarships/fellowships.Fixed costs will rise $2M.Athletics closed slightly better than anticipated with a deficit of
$430,000 rather than $440,000 as previously reported.

Regent
Semmens
noted the increase in transfers made by Bozeman from $142,000 to $146,000 this
year.Craig Roloff indicated those figures are accurate for transfers from
the general fund, and the remaining amount will be from funds other than
general funds.The total amount of transfers is greater than what is shown –
MSU-Northern was not from the general fund.Chair Mercer said the Board needs to know the total funds transferred
from all funds for both UM and MSU.Craig Roloff indicated the total was about $350,000 to $400,000
inclusive of the above amount, which Regent Semmens noted is down from the
previous year.Regent Foster asked Chancellor Sexton if he had gauged the effect of
their fund raising on enrollment, and if they had more scholarship money.Chancellor Sexton said 1/3 is devoted to scholarships which will help
maintain affordability.One of the challenges before the campaign was no endowed scholarships
for the College of Technology.That has now been changed and will enhance enrollment.The crafts, trades and industry courses all have waiting lists.He noted that the national average tuition for two year schools is
$1450, which at Billings is $3000.Regent Foster asked what could be done to update the outdated equipment
at the colleges of technology.Chancellor Sexton replied he had previously suggested bonding for $7M.But lacking that, they have made it part of their campaign.

Following
a ten minute break, the Board reconvened at 3:40 p.m.

Community
College Budgets

President
Karas
stated the 16% increase in FTE was more than Flathead Valley Community College
had budgeted.The Budget Committee is made up of members of all their stakeholder
groups.The FY05 budget was based on the strategic plan with increased
expenditures for adjuncts, full time faculty, insurance and utilities.They are investing in distance learning and enhanced technology.

President
Hetrick
told the Board that the summary in their packet detailed the primary changes
for Dawson Community College, with an increase of about $186,000 this year.Personnel increases were the largest category.The Board of Directors negotiated a two year contract, and classified
staff also will receive an appropriate increase.There has been no salary increase over the last two years.President Hetrick referred to the Farm/Ranch Business Management course
which has increased Dawson’s general resident growth the most since 1966
when it went from 160 to 300.They now have 38 FTE in Glasgow, and will have another 12 FTE in Miles
and Plentywood this spring.There are currently about 460 to 470 which is 35 over the state
allocation.If the Board continues to support expansion of this program, they will
continue to grow, as it is much needed, and welcome in the field.Another major item for their campus is the completion of the physical
education and performing arts center this November or December.

President
Hammon
reported when his students arrived at Miles Community College this fall, they
were in dorms rather than hotel rooms.Last year saw an increase of 6% in FTE, and now 6% over last fall.The major focus on campus is working with health care providers.They have 21 RN students in Sydney and Glendive.They are also looking at some of the other community colleges to bring
some of their programs to Miles.These would improve their ability to help with dual enrollment.They also have a FIPSE grant that has added 19 high school students to
the enrollment.They continue working with area hospitals and have found them to be
exceptional partners with financing.In an effort to keep better data on campus, they are switching their
system out to a new one.The general population of Miles Community College has averaged 55%
county and 45% out of county.This year it is 45% county and 55% out of county.

Chair
Mercer
said it appeared enrollment grew at all but Flathead Valley Community College.President Karas replied there was an adjustment for dislocated workers,
and they do have some growth but not as much.Chair Mercer asked her if it was the same for FVCC as for Helena CoT
that when the economy improves the campus loses FTE.She agreed this is a general trend. Chair Mercer asked if there was any
part of this budget process that might be improved, and general consensus was
it was fine in the current format.

Chair
Mercer
said enrollment at MSU-Northern is a major concern.He wants to have a dialogue at some point about this, and asked if
Northern did not exist what would happen if a program was put there.If they are on a collision course, funds need to come from some place.Referring to the 100 non-resident students at Bozeman, he would like to
see the data in a better format to show the economic impact of these students
on the community and state, as well as their support of resident students.He requested that Agenda pages be numbered sequentially from beginning
to end to make it easier to find particular pages.

Regent
Semmens
indicated he found it very helpful to have the metrics on a single page, along
with the dollar and percentage amounts, the staffing formula, and student
funding.He found it gives a better sense of what is being spent to educate a
resident student, which is $9400, with the resident student paying $3500, or
one third.The rest is state support and non-resident subsidy.Non-resident students provide the flagship campuses with about $8M.Regent Semmens indicated the Board had directed the two presidents to
decide how to spread the dollars around their campuses, but with different
approaches, there have been very different results.Because of this dramatic change, Regent Semmens said he doesn’t feel
the Budget Committee has focused enough on working out this issue, which a few
years ago was a non-issue.He noted that MSU has a benefit of $900 per student and provides $30 to
their campuses, while Missoula has a benefit of $630 but benefit their
campuses with $550.Regent Semmens indicated he will suggest the Budget Committee tackle
this issue, and believes it needs to be dealt with in the allocation model.Chair Mercer agreed the problem needs to be addressed, but believes the
allocation model is arbitrary, and the Board has set no policies on how the
funds are allocated.He does not believe it is the responsibility of the flagship campuses
to support the others, but rather should be based on what it costs to run a
campus.That amount will be supported by state funding and tuition.Chair Mercer also indicated the local tax payers are another possible
source to support the local units. Regent
Semmens agreed it was important to consider how state funds are allocated.

Commissioner
Stearns
announced that Governor Martz would arrive at the meeting on Thursday at 9:00
a.m., and Bud Clinch would be in attendance at 1:30 regarding the land grant
issue.Chair Mercer said they would take action on the budgets at 7:30 the next morning.

The
Board adjourned at 4:15 p.m.

The
Budget Committee convened at 4:30 p.m.

Budget Model
for academic programs

Rod Sundsted stated this provides a
consistent way to present the enrollment and fiscal impacts for every program.The second page details incremental expenditures, with the following
page detailing incremental revenue corresponding to that program.Roger Barber noted that the Academic Officers were involved in
developing this format, and it must be remembered that many cells will be left
blank depending on the circumstances of the proposed program.Chair Mercer asked if it could all be put on one page, and questioned
how they would be able to tell how these proposed programs affect the FTE for
other programs, and if they take funds from other programs.Regent Semmens thought a good addition to the information would be the
breakdown of enrollment and shifting enrollment.As far as taking funds from other programs, he indicated to Chair
Mercer that the Academic Officers had convinced him it was impractical, since
it is all so fungible due to the numbers of students taking so many different
classes.

Chair
Mercer MOVED they recommend to the full Board for approval

Regent Semmens indicated the
Board did not need to take formal action, but simply adopt.

Motion
approved UNANIMOUSLY on 3-0 vote

COMPENSATION
STUDY

Kathy
Crego handed out the Compensation Survey Report
and there was considerable
discussion on the appropriateness of the comparators, the studies used, the
amount of expenditures at research intensive institutions, among other things.It was agreed it was a good start, and the Committee solicited input
from faculty and staff to consider the nuances.This report will not be put away, but will continue to evolve.Erik Burke from MEA-MFT indicated he believed the use of CUPA was
appropriate but suggested there are other studies that reflect overall trends.He handed out two sheets of data, one for TIAA-CREF, and one for
defined benefit programs comparing employer-employee contributions by state.

5% BUDGET REDUCTION PLANNING

Chair
Mercer indicated the response to this mandated plan should be that the MUS has
budgeted for this level of quality, and if the general funds are reduced will
have to make up the lost revenue.The MUS will not cut expenditures because that would dilute quality.Regent Semmens agreed that any reductions would have to be backfilled
from other sources, which need to be determined.

BUDGET
INITIATIVES

Chair Mercer asked
that the minutes show these initiatives were adopted by the Board of
Education, and this Committee endorses them as well.

Regent Semmens indicated these are
backup materials which must be organized under the initiatives, since many are
still not clear.The
concept has been agreed upon, but the dollars may yet be different.He believes it will take at least $5M for the biennium.He indicated he was not familiar with the wild lands initiative.Rod Sundsted noted this was the requested redraft of the initiative
from agriculture and forestry. Regent
Semmens thought it was still a stretch that it created jobs. President
Dennison replied it was job creation for those in the industry with use of the
products off the lands.The request was for $300,000 to be matched by $300,000 from the timber
landowners.Rod
Sundsted said they were requested to beef up three of the initiatives
and he would hand those out at the end of the meeting.He reminded the Regents that in November they would be moving forward
with the Operating Budgets for FY06 and 07, and they need to make them
meaningful.He
will put together parameters for such things as what should be allowed for
utilities, and would share those with the Board, perhaps in a conference call
meeting.He
would like to at least have input from the Budget Committee, if not the full Board.

Regent Foster MOVED for APPROVAL of the Minutes of the July 7-9, 2004
meeting in Polson, MT

The
Minutes were APPROVED unanimously on a 7-0 vote.

Commissioner
Stearns introduced Cathy Swift, Chief Legal Counsel replacing LeRoy Schramm in
the Office of the Commissioner. She also acknowledged Kathy Crego who is
replacing Sue Hill for the next year.

Regent
Semmens said the operating budgets presented at this meeting were by far the
best and most meaningful he has ever seen in any position he has served.
He congratulated Rod Sundsted and Pam Joehler for a great job.

Regent Semmens MOVED for
APPROVAL of the Operating Budgets

Regent
Semmens gave an overview of the budget presentation given on Wednesday.
The budget totals $920 million, with $149 million from the state. The
budget has an increase of 6% this year. Enrollment is up 2%, there are
dramatic increases in utility costs with gas up 50-60% over last year.
Health insurance is up 12% for 7200 employees, as well as increased
scholarships and fee waivers due to tuition increases. He indicated
there are clearly differing opportunities and challenges on each campus.
The Budget Committee feels this budget permits continued quality but is
sensitive to constrained resources. Regent Mercer indicated the request
for funds in item g. are included in the operating budgets. Regent Roehm
inquired about the status of Information Technology for the system.
President Dennison suggested the CIOs from the two campuses, who have worked
closely together to develop the IT plan that was submitted to the state as
well as the strategic plan, might give a presentation at the November 17-19,
2004 meeting showing how the system is using the present technology,
including the data system. He wants to know the retention rates of
faculty and students. Regent Mercer asked if there are students who
complain the technology in the system is behind. President Dennison
indicated they would be behind some and ahead of others. President
Gamble indicated they have implemented some new things, but there are others
they can think about over the next five years. Although the campuses
have been given a guideline of 12% in the budgets for O&M, it is only
about 10.7% this year if the agencies are included, and for the campuses alone
it is 11.7%. Regent Semmens indicated this is natural in the resource
constrained environment. Deferred maintenance is also a state issue, and
he recommended that in the current environment of low interest rates, they
should address a solution now rather than later. Chair Mercer agreed
that it would cost more to defer the work, than to complete it now on borrowed
money. The majority of the dollars shown for O&M are actually for
utilities. Regent Roehm proposed working with the Governor to consider
moving the unused fire season funds to O&M for state buildings.

Regent
Roehm then indicated that some plan needs to be forthcoming on where salaries
are going following two years of flat increases. In this regard he put
three questions to the Board: 1) Fee waivers and scholarships slide the burden
of paying for those students to the other students who pay tuition. He
requested that all fee waivers be reviewed at some point, to develop an
overall plan on how to handle requests for new waivers. 2) Tying to the
state pay plan has a lot of implications and ramifications. He recalled
in the past they thought about paying above the state plan, and the state
indicated the Board was in charge of the university system. He indicated
the Board has asked the CEOs to produce and bring forth quality students and
educational environment, and they have responded. He believes the Board
needs to listen when the CEOs say recruitment and retention is difficult and
quality will diminish. A lot of faculty leave Montana for better pay
because they have family responsibilities. Regent Semmens indicated the
salary survey was discussed the previous day and is considered a start, and
will not be left on a shelf. Associate Commissioner Rod Sundsted
indicated there is no good data in the system covering the reasons for
turnover. Regent Roehm indicated he wanted to let the campuses pay more
if they want to do so. Chair Mercer agreed this was a topic needing
discussion, but questioned disconnecting from the state pay plan. Rod
Sundsted indicated the state pay plan funds the university system pay plan.
Chair Mercer was pleased to hear fee waivers questioned. He indicated
the students have been asked to look into the waivers, but there has been no
interest to do so. He suggested Student Regent French talk to MAS to see
if they know the magnitude of fee waivers, and that they are subsidizing those
students. Regent Hamilton pointed out that all employees have
experienced the same increases in utilities and other costs of living, and
rather than selective raises, she would like to see an overall long term plan
for all employees. She questioned the “complex” performance based
tuition scheme for resident and non-resident students. She asked if it
had been approved by the Board, and if not, did it need too be. If it
was approved, does it comply with the tuition guidelines? Although the
campuses have been given some latitude in pricing, Regent Hamilton asked if
the Board needed to set firmer guidelines at this time. President Gamble
indicated the “complex” referred to the blend of scholarships and tuition
discounting under the authorized 2% non-resident fee waiver. The
resident and non-resident scholarship programs are straightforward. They
have had great success in fundraising for scholarships, and have leveraged in
automatic scholarships. Some non-resident students automatically qualify
for $8000 scholarships, depending on test scores. in looking at the
bottom line, they have turned away some non-residents to attract others.
He suggested they could provide a complete report of enrollments and the
effects. Regent Hamilton indicated that would be helpful, particularly
data showing shifts in low income to high income students. Discounting
usually helps high end students. The cost of education in Montana could
negatively change the population of the campuses, leaving only the affluent
able to attend.

Regent
Roehm did not want to encourage and endorse an operating cost that Montana
does not want to fund. He questioned the size of the system, all the new
things being taken on by the campuses, and whether they were all germane to
mission statements. He stated he didn’t want to approve a budget that
the legislature would call out of control. Chair Mercer noted that is
probably one of their fundamental debates. Is the MUS an expense like
the Department of Corrections, or is it the driver of the state’s economy?
He believes they have taken the stance they are the driver. The Board
and the system need to get the message out to the entire state that for a
$150M investment, they have a $900M business in the MUS that is inventing,
discovering, bringing more business, and educating old and young. He
hopes to see that number over $1B in a few years.

Regent
Semmens PROPOSED adding to the budget the addition of two staff members for
the Office of the Commissioner for a total of $180,000 a year to be funded
from the Regents discretionary $350,000 each year, with the hope the
legislature will fund these positions in the future.However, if the legislature does not fund them, the Board will continue
to fund them every year from their own discretionary budget.

Although
Regent Semmens proposed this as part of the overall budget, he suggested it
could be separate.Due to dramatically increased activity in advancing the
MUS around the state, there is need for additional staffing to keep the
Commissioner from being stretched too thin.He believes the Board must be able to afford additional staffing.He requested the Board authorize the addition of two staff members, one
senior position for outreach activity, shared leadership, coordination and
leverage of the great research in the system, and assistance in building
partnerships.The
second would be a junior- to mid-level administrative assistant position to
give support to the Commissioner and the new person.Regent Semmens indicated the annual cost would be $180,000 in the $920M
budget before them.The
Board has a priority budget of $350,000 every year, and still have $217,000
available at this time.He would like to allocate $100,000 now for two positions for about six
months.He
believes the Board needs to make clear to the Commissioner that this is a
commitment going forward.It is an initiative they could take to the legislature, but if that
fails the Board would commit themselves to funding the $180,000 from their
$350,000 set aside every year. Commissioner
Stearns appreciated the comments, but noted her office has been hesitant to
make such a request because of the stretched conditions throughout the system.A year ago she never thought it would become this extensive, but she
has taken ownership of their initiative to make MUS a driver in shared
leadership and it has required a tremendous external commitment around the
state.The
relationships have been very beneficial, but it has spread her office very
thin.Regent
Hamilton asked Regent Semmens if this was an acceleration of the FY06-07
budget.He
indicated it was the Board taking charge at this point and realizing how
critical the issue is, and he hopes the legislature will agree.Regent Hamilton asked if additional funds for shared leadership were
added to the budget, and Regent Semmens indicated they were.Regent Hamilton said it is obvious the Office of the Commissioner has
been understaffed, but they must know where the money came from, such as
tuition and fees from the students, or from the campuses.She wants the Board to be clear on who pays the cost.Further, she did not believe two more staff would be sufficient, and if
they were to fulfill their Constitutional responsibility they must have a
strong central office.

There
was no division of items, and the proposed operating budget as amended was
APPROVED unanimously on 7-0 vote.

Regent
Semmens
gave an overview of the Budget Committee meeting of the previous afternoon.He reported there was consensus that the budget model for academic
proposals is a good starting point and can be adjusted as needed. Regent
Hamilton said it is also important to have a metric reporting model for the
Agencies, for although they have no classroom, faculty are there.Chair Mercer agreed.

Regent
Semmens
reported on the brief review of the compensation study, and the questions
raised.He indicated this report is a good starting point, and they will
continue to receive input from the campuses to improve the Board’s
knowledge.The appropriate contact is Kathy Crego, and the Board encourages input.
Chair
Mercer requested a compilation of facts that could be agreed upon before
trying to discuss the issue further.Regent Semmens indicated the system still does not capture data as it
should.Commissioner Stearns reminded all that they needed to prioritize two or
three of the points raised, and requested Jim Rimpau and Bill Muse to help
gather the most helpful data.Once Kathy Crego begins bargaining, she won’t have much time to spend
on this.

Regent
Semmens
then indicated that Rod Sundsted was looking for guidance on the MUS response
to the standard request for a 5% budget reduction.The Committee indicated they have identified the fixed expenditures
needed for quality, and if there is a 5% cut in general fund support it must
be made up from others funds such as increased tuition, and non-resident
students. Regent
Roehm indicated it was the same as always, the MUS always survives when they
don’t receive what they want, and Montana students will not be able to
attend due to the cost.Chair Mercer replied this is the level of quality the citizens have a
right to expect, and the MUS has the requirement to deliver.While the Agencies can’t fall back on raised tuition, the ability of
campuses to raise tuition is not to be considered a luxury but a heavy burden.The response to the 5% reduction will not be a line item statement, but
a general statement of what MUS intends.

Reporting
on the Budget Initiatives, Regent Semmens said they are largely in place, but
need to be organized for a better fit.He explained that the MUS Initiatives under the general categories are
a little different from those used for Shared Leadership.The campuses were creative with specific recommendations like a career
academy for $1.2M, Montana Tech’s economic development for $100,000, No
Child Left Behind for $580,000, and economic development in health care for
$1M.These total short of $3M for the biennium.He requested a review of Enhanced Access.The proposal envisions $1M for need based aid, and $2M for non-resident
recruitment.The Shared Leadership group believes it needs $5M for the biennium.Regent Semmens therefore recommended $3M for need based aid, and $2M
for non-resident recruitment.President Dennison handed out a revised sheet detailing the initiative
from the College of Forestry and Conservation.They request $175,000 which will be matched by $200,000.Regent Semmens suggested this handout be used instead of the previous
one, and that it be placed in the Agriculture, Natural Resource and Rural
Development Initiative.Regent Hamilton asked if they were to vote to approve or disapprove.Regent Semmens indicated they could do that, but also said he was not
comfortable with the package, but in the past legislative initiatives have
been discussed at the Board level and it should be done now.Chair Mercer indicated it must be done at this meeting due to the time
line.

Governor
Martz
arrived at 8:58 a.m.Chair Mercer told her there was a presentation on Shared Leadership
they wanted to show her, and she chose to see it before addressing the
meeting.Following the presentation she stated there was a need to gain new
sources of income rather than pulling from the same sources.She requested that those present assist at the Legislative Session to
stop any repeal of the tax deductions.She said that early in her administration revenues went into decline,
and they had a disastrous fire season.The Governor said the best decision ever made by any state agency
during her tenure was the hiring of Sheila Stearns as the Commissioner of
Higher Education.She thanked the Commissioner for her friendship and commitment.Governor Martz said the transition from the Legislature to the Board of
Regents had significant frustrations for Chair Mercer, and she thanked him for
his commitment and perseverance.She thanked Dave Gibson from her office for his leadership in Shared
Leadership.The two-year institutions need to play a big role, and education to the
rural areas through on-line courses is vital.The Governor believes every person in the state should be able to
participate in higher education.Chair Mercer said they could not underestimate the impact the Governor
has had on the Board of Regents.

Chair
Mercer
then gave a brief overview of the history of the Shared Leadership for a
Stronger Montana Economy.They have now arrived at the selection of the Steering Committees and
the membership will be announced in about three weeks.The commissioner’s request for travel expenses has been included in
the $50,000 in the budget.Governor Martz said the state is turning the corner, but she reminded
the Board when they go to the legislature to remember there is no increase in
long-term revenue.

The statement
on Quality was comprised of items that had commonality across the board, with
a narrative description for what each campus does. Chair
Mercer indicated the report still does not satisfy the reason they want to
define quality.He believes
target numbers need to be established for each area of measurement to make the
reports meaningful. Roger Barber
indicated the group had worked very hard, but perhaps they misunderstood the
charge, or didn’t capture the charge.Chair
Mercer said he was not demeaning the work, and they did identify the areas to
be measured, but he asked if they could not present something concrete to
measure against for each item.Bill
Muse from UM indicated it would be more meaningful to have numbers as
benchmarks, and to rate quality against those.Chair Mercer said he wanted the Board to help decide the benchmarks. Regent
Hamilton said there is no such thing as a minimum level of quality.There either is quality, or there is not.It is driven by the market and public perception, and the
campuses have many means of measuring their quality.She believes what the Board needs to do is better articulate
their priorities because those benchmarks will change over time.Chair Mercer explained access and quality are vague, and he wants tools
to argue for funding.One is
satisfying accreditation, and he believes there must be four or five things
that could be provided at this level.Regent
Semmens said they all agree the committee did a great job in condensing this
into management metrics.These
are the ones that should be closely watched for achievement.Now staff needs to say this is where we are on these measures.He questioned if it shouldbe
compared to peers, the national picture, or something else.The MUS expenditures for FTE are $9500, and peers $12,800.This is a starting point.He
suggested also the percent of family income.He is convinced that if Montana families are being asked to spend 25%
of their income for tuition, while peers are spending 18%, the Board can tell
the Legislature this is where they are falling short and here is the reason.This has been useful in identifying the measures, and now staff needs
to insert the numbers on where the campuses are, and showing where peers are.Chair Mercer agreed that Regent Semmens had captured it, but that it
wasn’t just about peers.For
instance the peers fly first class, and Montana carpools, but the important
thing is both get to the meeting.This
type of thing needs to be shown besides just the dollars spent.

Regent
Semmens moved for ADOPTION of item a.

Commissioner Stearns agreed this was a first step, and it is a challenge.MUS must be able to measure against its own benchmarks, as well as
those of appropriate peers.Regent Hamilton stated that as the Board gives direction they need to
be specific.The staff is now working on the PEPB report for the Legislative
Session.She asked if this item could be made compatible with the PEPB report,
or if it would take more work.She indicated staff needed more guidance on Item 8, research efforts
and community outreach, and the Board needs to discuss it.Some data are available and some are not, depending on the campus.Employer satisfaction is not consistently gathered at this point.Jim Rimpau and Bill Muse have to work with the smaller campuses so that
institutional research on this issue is consistent.

Hill County
Commissioner Kaercher
said the Boys and Girls Clubs serve 22,000 youth who fit the criteria for need
based aid.He urged the Board to approve this item.Regent Semmens asked if this was one scholarship per year, and if it
was renewable if the student maintains a certain GPA.Commissioner Kaercher said it was, and that it was awarded to one youth
of the year following rigorous competition.Regent Roehm urged the Board to reject this item.He said it sets a precedent and any number of groups in the state will
be trying to do the same thing.He asked Student Regent Kala French to review with the students the fee
waivers, and to prepare a list of all fee waivers and what they cost for the
first level of evaluation.His next reason to deny this item was its impact on students who are
not eligible for the need based aid.The tuition approved in May was increased by 12%.He urged the Board to at least defer consideration until after a review
of all feewaivers, but asked that it be rejected because of the precedent and
impact on all students who are already paying 12% more in tuition.Regent Hamilton said she likes this program and on the basis of the
data, income level, accessibility of moderate and low income, family needs,
and Shared Leadership she thanked Commissioner Kaercher for bringing this
proposal forward.She reminded the Board in the last three years they had approved fee
waivers for children of victims of 9-11, veterans, senior citizens, athletes,
and none of these waivers had need as a basis.She said a low income student would have to pay full price, where many
of the Board members could go to any campus and get the senior discount.She encouraged TRIO as a source of support.Regent Semmens asked if the staff had a recommendation.Commissioner Stearns said she recommended it, but was cognizant of
Regent Roehm’s concerns.Regent Semmens said that many of them are familiar with the work of the
Boys and Girls clubs, and he will support it in the context of outreach.He said the impact is not just getting one child to college, but what
happens when a glimmer of hope is established, the children start focusing on
achievement, and they know they have to do certain things to earn it.President Gamble applauded Commissioner Kaercher for bringing this item
forward, and suggested a model.He suggested the Boys and Girls Clubs go out to fund an endowed
scholarship which does not diminish revenue. President
Dennison said it is an admirable goal, but it struck him a better approach
would be what is done in other states.If there are students who are qualified to attend college, but can’t
afford it, the campus would guarantee that the tuition doesn’t fall on them.

Regent
Roehm offered an alternate motion to defer consideration until a review of all
fee waivers by students, and the Commissioner and CEOs have had an opportunity
to provide a systematic approach to this issue.

Chair Mercer indicated he did not like the endowment idea, nor the
idea to offer free tuition to those who can’t pay.He suggested perhaps there were some fee waivers the Board should
rescind and to take this one back.He said they should wait until they get the comment of MAS, and what
the overall fiscal impact is.

Item
c. was deferred to the November 17-19, 2004 meeting with a review of all fee
waivers and their total cost.

Chair Mercer moved for ADOPTION of Item d. with amendments adding “or her
designee” and “recommend” approval or disapproval.

Regent Semmens said he did not like the level of
detail for the four committees.He believes it should be more general and this is too specific for
by-laws. He was also concerned with the time and commitment of the Board
members, and he felt the Work Force Development Committee and the Academic
Affairs Committee could be merged.He said that Leroy Schramm had drafted very constructive guidance and
he suggested changing the Management to Staff and Compensation Committee.It is customary to have a compensation committee.He supports the concept and wants to move forward, but doesn’t like
the four committee proposal and the level of detail. Regent
Hamilton said that in July they were asked to share their concerns with the
Commissioner for a more collaborative draft.She was disappointed that only the same item was included in the
Agenda.She appreciated the old one that Regent Semmens had handed out that
day.Regent Hamilton indicated she would like better defined the decision
making, votes and composition of the committees, and wanted to know if they
would include faculty, staff, administrators or students.She also questioned who was going to do the work for the committees,
could they create task forces, could they assign work to staff with or without
Board approval.If the appointments are by the Chair, will they be confirmed by the
Board?She said all committee meetings should be public and noticed as such
since more than just committee members have been attending.She stated further that minutes should be taken and posted, and each
committee should elect a regent as chair as well as a recording secretary.Regent Semmens said the Academic Committee needed to be edited so that
it was not required to review all academic proposals, but the bigger ones
only.Regent Roehm asked if it should state “review and recommend.”Regent Roehm expressed the need to move this along, and reminded the
Board they had adopted his recommendation for the Academic/Student Affairs
Committee, but no one had yet been appointed to it.Regent Foster said he supported what Chair Mercer was trying to
accomplish, and found it ironic with the focus on economic development that
the Board would not want a committee named to address those issues.He believed that most of the concerns voiced by Regent Hamilton are
addressed in state law.Chair Mercer explained the level of detail in the proposal was to
provide ongoing guidance.He indicated he would accept the Staff and Compensation name change,
and encouraged the Board to pass the proposal which could be changed as
needed.Regent Semmens asked if he was going to leave it that the
Academic/Student Affairs Committee review all proposals, and Chair Mercer
indicated yes, someone should be doing a review.

On a role call vote, Item d. was APPROVED with Amendment of “Management”
committee to “Staff and Compensation”, add “or
her designee” in the last sentence of Article IV, and add “recommend” approval
or disapproval to Article VII, Academic/Student Affairs Committee on a 4-3 vote with Regents Hamilton,
Roehm and Semmens dissenting.

Regent Foster was curious about the perception of what the proper
role of the Board would be to help maximize appropriations from Congress, and
was looking for goals and direction for the Board, as well as wanting to know
the purpose of the projects seeking funding.He would like an evaluation of when a trip to DC is required, or if a
phone call or e-mail would work as well.Regent Foster said it was important to keep the entire delegation
informed at all times, and that it was important to focus on projects that
would create jobs in Montana.He further stated they need to have regular meetings with the
delegation or their staff for exchange of ideas and suggestions.The delegation talked about sending a representative to all of the
Board meetings, but it wouldn’t necessarily be needed although it would give
the Board quick and easy access to the delegation.Chair Mercer said it would be good to meet with them to see what could
be done better by the system.He was also surprised to learn that the MUS had lobbyists in DC.He believes the Board needs more knowledge about this, and should play
a greater role in assisting to improve the process.He reminded the campuses that when they do go to DC, it should not
always be requesting their help, but offering help from MUS with problems they
are addressing for Montana.He told Regent Foster he wasn’t sure what he expected to happen next,
but recommended a discussion with the Commissioner and then to ask the
delegation to give chief of staff approval to sit down for a discussion with
the Commissioner and Regent Foster, followed by Regent Foster bringing a
report back to the Board.Regent Foster indicated he hoped the Commissioner could talk with the
campus CEOs and perhaps get recommendations that everyone would say are good
ideas in a spirit of cooperation.Regent Semmens said the new senior position in the Commissioner’s
office could be helpful to have in charge of outreach and economic
development, and further benefit that by extending the research through the
commercialization efforts as well.

The
Board recessed for lunch at 11:52 a.m.

Regent
Foster left the meeting at noon - excused

The
Board reconvened at 1:26 p.m.

SYSTEM
ISSUES continued

f.

Request that a definitive plan
be developed to pursue resolution of Legislative negotiations on Trust Land
fees to include asking OCHE Legal Counsel to draft a proposed bill for
consideration by Legislative leaders. – Regent Roehm

Regent Roehm indicated he requested this item
be on the agenda so it would not be forgotten since these are significant
issues.He would like to see a review of the bidding, and have legal counsel
prepare in some way legislation as a remedy to this situation.He indicated Leroy Schramm had already prepared a Complaint that could
be filed.Bud Clinch Director of DNRC gave an overview of his department and its
duties.He indicated the Legislature had acted to make assessments against the
revenues from the lands to fund DNRC.Tom Schultz advised the Board they had three avenues of action, 1) to
reverse the payments with legislation, 2) obtain the Attorney General’s
opinion, and 3) to seek litigation.He stated it is not black and white on either side of the issue.Other options he suggested to the Board were to give management of the
lands to others, or manage the land themselves.He suggested another area that would be beneficial to the Board so they
would have more net revenues would be to become an active participant with
DNRC to overcome political and public objections to their plans for use of
these lands.He believes conversation at this time is the best course of action. Regent
Hamilton stated Mr. Schultz had implied the lands are not owned by the state
but by the beneficiaries.Bud Clinch replied there are legal ramifications for others managing
those lands.Legally the MUS could manage these lands themselves.Regent Hamilton asked if they were saying the Board could be assured of
receiving appropriate revenues, or the lands could be better managed.Bud Clinch replied they have taken heat in the press for the twelve
years he has been with DNRC, as being either too aggressive or too slow.There are opportunities to increase revenues with transition lands for
dry land farming, grazing, and a prudent trust manager would look to diversify
development.There is intense opposition from the public.Regent Hamilton asked if the campuses could take on the management of
these lands.Chancellor Gilmore said that in his six years at Montana Tech he has
taken intense interest in the trust lands.DNRC does a fantastic job, and he doesn’t believethe campus could do it at the same cost, or with the same efficiency as
DNRC.He believes they could only make more money with a change in the rules.Chair Mercer said it looks as if there is a misunderstanding about who
owns these lands.If they want to set them aside for a park, or lease for grazing it is
okay.The concept of the lands as a trust, and being managed to benefit the
beneficiaries should cause the Board to look at whatever options there are for
the long term, and then to speak up.Bud Clinch indicated they have been involved in the land use planning
issue in Flathead, and Whitefish, and the forest land has incredible value in
real estate potential.Regent Roehm indicated he heard the same thing about five years ago,
and then as now stipulated the management was not the issue, but the
assessment, its amount, and the legality of taking the assessment since the
Constitution says the funds will be inviolate.Although DNRC has discontinued assessing Morrill lands, they have not
lost any revenue since they simply spread the loss across the other grants. Regent
Semmens indicated a more fundamental issue is that the Board members are
fiduciaries and they are receiving guidance from Counsel that if it is legally
improper they need to look into it.The difference is legal opinion.He said he was not aware until just now that they had discontinued
assessments against the Morrill lands.Regent Hamilton stated she heard the campuses are not interested in
managing the lands, but they are looking at the legality of fees and
ultimately it should be determined in the Court.The Legislature decided to shift costs from the State general fund to
MUS and ultimately students because it is used to offset costs for students.She wants to pursue the fiduciary responsibility discussion.Chair Mercer said in the biggest picture, they could earn a little more
money with the attitude they wanted to make as much as possible, but it might
be wise for the MUS to have an Advisory Board that would keep track of these
lands, and the beneficiaries need to decide what should be done with any given
parcel of land.Chair Mercer indicated the debate was not about the right issues.If the assessments are in violation of the Constitution and breaking
the law, then the Board better challenge it, but he believes that if lawyers
differ on the meaning, then the Board is probably not in a position to
challenge it.He believes that if the assessments are shifted to the MUS, the
legislature will lessen the general fund support by the same amount.He said that Bud Clinch is saying if the Board wants more money, help
them maximize the profits.Cathy Swift, Chief Legal Counsel for MUS indicated she had not done an
independent legal assessment of the issue but that she had read those of both
Leroy Schramm and Greg Petesch.Leroy Schramm had identified the legal issues that should be dealt
with.Ms. Swift said she did not know if a lawsuit was appropriate but was
willing to do the assessment for their fiduciary responsibility.She suggested perhaps the Board might need to look at the data to see
if they are getting benefit for the dollars, but the other part is purely a
legal question.Chair Mercer replied the question should then be framed that if they
win the case there will be no money from it since the Legislature would take
it from the lump, but it would cover the Board as far as doing their fiduciary
duty.Ms. Swift added there is the back issue of the $10M on the Morrill
lands.She said there is also the possibility of the Board approving the fees,
but the idea is to preserve the Regents’ authority over the dollars. Regent
Roehm suggested staying with the previous vote to explore a compromise.Regent Hamilton reminded the Board at the July meeting they had
suggested the Commissioner discuss this issue with the PEPB.Commissioner Stearns replied the PEPB had not had another meeting, so
she had spoken to Senator Barkus and sent the information to the committee.The only one to reply was Senator Barkus who appreciated the
explanation of the issue, and said the other members of the committee were
consistent with the last paragraph that there not be a court decision. Chair
Mercer indicated Bud Clinch had put together a letter with options to increase
the revenue.Mr. Clinch said he would be pleased to send the letter to the group.

Regent Roehm moved for adoption of the last paragraph of the
Commissioner’s memorandum which reads “I suggest, in keeping with the
board’s prior vote on this issue, that we discuss a process for exploring a
compromise solution to this issue.My office can spearhead such an effort with the input and participation
of campus personnel.I believe that we can set up an internal framework by which to prepare
compromise options and that we can be prepared to begin discussions with DNRC
and the legislative council on or before November 1.”

There
was a brief update of the Shared Leadership for a Stronger Economy initiative,
and Commissioner Stearns noted that requested funds had been included in the
budget that was approved earlier.

h.

Proposal for the Board to
initiate a Planning Process to describe what they wish the Montana University
System to look like in three to five years and provide this plan to the 2005
Legislature - Discussion – Regent Roehm

Item
h. was deferred to the Board retreat.

i

Work Plan 2004-2005 for the
Montana University System – Commissioner Stearns

Over
the course of several meetings, all of the CEOs, on a rotating basis, will
have an opportunity to talk with the Board about important higher education
issues, trends and directions, and concerns related to their campuses.
The Commissioner will determine the rotation.

Chancellor
Gilmore reported that Montana Tech marches to its own drum, and there are no
other campuses in Montana or its neighbors with the exception of Utah, that
resemble their blend of natural resource and energy programs.He indicated he had spoken with the Commissioner and President Dennison
to go to the Governors of all the states in the northwest to put money into
Montana Tech the same as they do for dentistry and other medical programs.He approached WICHE but they have no idea what to do with Montana Tech,
and there is no solution yet.He requested the support of the Board to obtain a letter of
introduction from the Governor to the neighbor states that do not have Techs
programs.He believes the Governor of Wyoming would be willing to support the
programs at this campus.He believes that Tech needs to be supported in this effort and to be
present as a Pacific Northwest Regional institution.The funding would work the same as for WWAMI where each campus sends a
certain number of dollars to support each of their students attending.

Dean
Jane Baker
of the Montana Tech College of Technology reported that following a difficult
start the merger of the two campuses has been completed and the CoT students
enjoy all the services of the main campus, while students from both campuses
go back and forth for a variety of classes.The College of Technology is now called the South Campus.They obtained a $95,000 grant to enhance recruitment and a $35,000
grant for work they are doing with UM.They are becoming more aggressive in writing grants for seed money, and
continue to work with local industry.They are identifying programs which can be partnered, and are
developing more on-line courses.

President
Terry Hetrick reported that Dawson Community College just completed
their ten year accreditation study and visit, and three year master plan.One of the most difficult issues facing any institution on the eastern
plains is the decline of K-12 enrollment and high school graduates.Over the last three years there has been a 10% decrease.President Hetrick said at the same time they are watching the demise of
the small family owned farm.He believes they must become more mobile and take education to the
people who need it the most.Their Farm and Ranch Management program has filled the niche that
Dawson Community College can reach.Although it was difficult to find teachers for this fall, in Spring
they are going to have two classes in Lewistown with over 50 people enrolled,
they have another twelve students in Glasgow, and they will see an increase in
enrollment of 15% to 20%.He told the Board that if higher education doesn’t support those
people, Montana will lose that way of life.

President
Gamble
handed out the Graduate Survey for MSU-Bozeman.He said their current rate of grant expenditures is growing $8M a year,
and asked how many businesses were doing that well.He referred to the INBRE grant which would be talked about later at
this meeting, and believed they would be able to announce another $10.5M grant
on Monday.They have talented and productive faculty, and although they don’t
have the triangle of the east, they do have the I-90 corridor.It is his vision to see that developed.Regent Roehm asked President Gamble to flesh out his ideas on this.President Gamble said from his perspective he sees UM-Missoula, Montana
Tech in Butte, MSU-Bozeman and then MSU-Billings complementing each other on
this east-west corridor.Over the next five to ten years, they could partner and harness that
power to make a positive impact on how they help the economy.Regent Semmens asked if there were opportunities for better
coordination in research activities between Missoula, Bozeman and Butte that
might help support each other.President Gamble indicated they are seeing increased communication, and
encouraged his colleagues to look for opportunities and take advantage of
them.Chancellor Gilmore said that if they are trying to mimic the research
triangle in North Carolina, more coordination and complexity would not help.He said the state had stepped in to create a major research park and
created a whole gamut of infrastructure.He believes that is a lot different from having the campuses trying to
do the same.

Chancellor
Storey indicated that if anyone had seen the morning paper, enrollment of
freshmen at The University of Montana-Western was up 40%, while overall they
were up 5%.Those people who questioned the Experience One program helped faculty
to clarify the understanding of the program.He stated that when he interviewed for this position he went to the
Chamber of Commerce, and was asked what was happening in American higher
education.He replied it was exactly what was happening in Dillon.Many are watching Dillon, and many have toyed with installing the block
system.While he was at Colorado State running these programs, many asked if he
believed they should do the same, but only two did: The University of
Montana-Western, and Cornell in Iowa.He believes that when faculty look at the block system seriously, they
think it is too much work for them. But those in the system believe it is
great and say their students have never worked so hard, and they have never
worked so hard.

Chair
Mercer referred to the WICHE slots that are purchased at the medical schools,
and asked if Chancellor Gilmore wanted Wyoming to purchase slots at his campus
in the same way.He asked the Board if they had any objections.President Dennison indicated that if WICHE does not want to participate
in this effort, then he would suggest following Chancellor Gilmore’s
proposal.Commissioner Stearns indicated she did not believe there was any foot
dragging, but she would be willing to look into it.She followed up on President Hetrick's comments about eastern Montana,
indicating there are far too many boarded up windows in Montana’s small
towns.In community conversations this summer, she repeatedly heard from
desperate residents they are losing their students to North Dakota, whose
Boards are willing to have a flexible tuition policy.For Montana to become competitive they need to learn from this.Commissioner Stearns said she would follow up with Susan Patton,Regent Hamilton, and Bruce Marks on a strategy for the interior upper
great plains.She wanted the CEOs to remember that the issues they bring before them
are worked on, and they are still looking at the question of honorary degrees.Chair Mercer asked those involved in these conversations to let the
Commissioner know if they believe they are worthwhile or if they could be
changed in some way.

AAS in Radiologic Technology
ITEM 124-304-R0704 – Authorization to Offer an Associate of Applied Science
Degree in Radiologic Technology; Flathead Valley Community College

Regent
French MOVED for APPROVAL of Item b.

Regent
Hamilton asked if these were really two year programs given the number of
credits required to complete them. it was explained that some programs
require additional credits for licensure or accreditation. President
Karas said they could probably not complete in two years, unless they took
summer session which would give them six semesters. Regent Hamilton said
other programs in the state are similar and asked if they are transferable.
President Karas said the Two Year Council had looked at that, and was
looking at ways to coordinate the programs. President Dennison had a
similar question, since three other programs are coordinating on-line for the
first year of the curriculum. President Karas said she was not aware
Billings was on-line, but she wanted to do this as the two year group.
President Dennison said it was specifically approved by the Board that the
first year courses would be on line for place bound students. Regent
Hamilton said that at a conference they talked about moving curricula out of
silos and into the entire system. She asked how this could be brought to
the Board level. They are struggling with it in the Nursing committee.
They can improve efficiencies by delivering on line, and make the classes
transferable across the system. She indicated she would like to approve
this proposal with the condition that Flathead Valley Community College works
with other campuses to deliver at least the prerequisites on line.
President Karas said they are willing to work with everyone. They offer
general ed courses on their campus, and they are happy to work to offer them
on line, but stated that does not work for all students. However, they
would be happy to coordinate their curriculum. Deputy Commissioner
Barber said that to the credit of the two year campuses, several months ago
they were talking about a common curriculum being needed in the state to
deliver to more students, accelerate access and increase transferability.
This was the first time in his experience anyone voluntarily talked about what
they could do to benefit Montana. He is trying to get the nursing
programs to do this voluntarily, and they are still not there.

Sarah
Jane Steen reported this $16.5M grant was a collaborative effort which
included the tribes.It will be used to address infectious disease and environmental health,
and provides student research opportunities.

Regent
Roehm thought this letter could be strengthened by including the selection
process. Chair Mercer asked Regents French and Roehm, and Roger Barber
to finalize this letter and to have it sent out under either his signature of
that of the Commissioner.

Long-term Lease with the Agricultural Research
Service - ITEM 124-2006-R0904 - Authorization to
enter into a Long-term Lease with the Agricultural Research Service of the
U.S. Department of Agriculture for 2.08 acres located on the MSU Eastern
Agricultural Research Center; Montana State University AttachmentPlatLease
AgreementLetters of
Support

An
Errata Sheet was handed out for changes in the Staff Items for review prior to
the Consent Agenda being taken up the following day.

Chair
Mercer advised that Student Reports would be the first thing on the Agenda for
Friday morning, followed by the item on the Revenue Bonds, and then a
presentation by Regent Semmens on the Budget Initiatives as a package.

The
meeting recessed at 5:02 p.m.

FRIDAY,
September 24, 2004

The
Board reconvened at 8:26 a.m.

Superintendent
of Public Instruction, Linda McCulloch present for meeting

Craig
Roloff explained the sale of bonds would begin the week of October 12, for a
total face value of $24.3M at 4.81%. For the next twelve months, the
Grants office will pre-fund the first year’s debt service, and will deposit
next year first dollars to debt service so there will be 1.5 to 2 times the
debt due at any given time.

Regent
Roehm MOVED for APPROVAL of Item i.

Item
i. APPROVED unanimously on a 4-0 vote.Regents Foster and Taylor were absent, and Regent Semmens recused
himself from the vote on the chance D. A. Davidson might sell some of the
bonds.

Following
elections of the evening before, Matt Larson announced the new officers of
MAS: Justine Kapperud is Treasurer, Adam Lucido is Vice President, and Matt
Larson is President.

Chair
Mercer responded to the letter presented by UM indicating he did not recall
anything being presented in the building fund that was to be used toward
safety issues, such as cameras. He had a second issue with cameras on
campus, that being how to deal with civil liberties and security at the same
time. He suggested also that perhaps the cameras could be within the
budget of ASUM and asked if they had looked at putting funds into safety, or
if UM maintenance funds could be used. He wanted to know the best way
for the Board to deal with this. President Dennison said he has not
heard much discussion about an abuse of civil liberties. The major issue
is where to locate the cameras for the greatest benefits. Wherever
cameras are placed, there will be no incidents. He suggested all of the
resident halls should have them, even though those are the best lighted areas
on campus. They have had estimates running from $500 to $500,000, and
President Dennison said they will have something in place in the near future.
They have been working on this issue despite there being no fee allocated to
it. He indicated he did not want the issue of the fee to come up again,
and hoped that by the November 17-19, 2004 meeting, the issue would be
solved. Chair Mercer said it hits to the heart of the Board to be
blamed. He asked if cameras are put at UM, why not the other campuses.
It is a great expense and must be balanced with freedoms. Gale Price
said they had talked about funds to provide whistles to all females on campus,
but late at night, no one would hear them. Their second plan was to hire
a self defense instructor. Chair Mercer requested an update at the
November 17-19, 2004 meeting. Regent Hamilton noted it had been
two years since they began discussing safety issues, especially security for
research. She said there is a report due at the November 17-19, 2004
meeting on the security situation on each campus. Chair Mercer
said it should include bio-hazards.

END
STUDENT REPORTS

BUDGET INITIATIVES

Regent
Semmens MOVED adoption of the Budget Initiatives now presented

Regent
Semmens indicated these initiatives are above and beyond the present law
adjustments for the 2007 Biennium.

There
was thorough discussion of each of the proposed initiatives, with some
disagreement voiced on which priorities should be included. It was
decided that matching funds from industry partners would be required for each
of the areas requesting general funds, and the tuition revenue would also be
shown as an offset.

Following
a ten minute break, the Board reconvened at 10:25 a.m.

Regent
Roehm left the meeting at 10:15 a.m. - excused

Regent
Semmens indicated that between now and the November 17-19, 2004 meeting, the
section for the Commissioner’s office needs to be reworked. Dean Moe
noted that under the two year initiative, her communications were not
reflected. The first was for $100,000 to determine needs, and the second
was for the creation of a common curriculum in high demand areas, and creating
a type of master teacher with a system approach. She believed that was
for about $300,000. Regent Semmens indicated he would be happy to add
another item to create a common curriculum. He also requested Chancellor
Sexton do a rewrite of the No Child Left Behind initiative to make it more
appropriate as a system-wide initiative. Regent Semmens indicated they
needed to increase resident tuition assistance to $3M from the general fund.
President Dennison indicated an $800,000 grant from the Washington Corp. next
year can be applied to the match for the Non-Beneficiary Student Initiative.
If there are no matching funds of 20% or more found for any given
initiative, no general funds will be expended. Tuition dollars must also
be shown as a contribution to each initiative. A narrative explanation
will also be required for each item.

The
Initiatives, and dollar amounts were approved, as shown in the table below and
with the requirements noted above, unanimously on a 4-0 vote with Regents
Foster, Roehm and Taylor absent.

Carol
Link re: Building Noise from Montana Tech's Chemistry/Biology building

The
following individuals spoke about the noise created by the Montana Tech
Chemistry/Biology venting system, and requested the Board try to do something
to mitigate the nuisance.

Carol
Link

Bill
Nokes

Chris
Douglas

Debbie
Nokes

Chancellor
Gilmore indicated they have tried to address the problem which was not a
result of cutting costs. The A&E study was inadequate, and their
suggestions were not acceptable to correct the problem. He most recently
worked with Laura Howe at UM to address the problem. Chancellor Gilmore
will put together a small working group with membership including neighbors of
Montana Tech to attempt to arrive at a solution. He believes it will
require a sound engineer through A&E. President Dennison suggested
Hugh Jesse of UM work with the committee.

b.

Other
Comments

Deputy
Commissioner Barber stated Col. Soha had requested he relay to the Board his
concerns about transfers within the system since he could not be there
himself. Col. Soha has two sons in the system. One started at an
out of state university and transferred to Bozeman. Following that he
transferred to Western. Each campus charged an admission fee which he
feels is inappropriate since these schools are all one system.
Transcripts from the out of state school had been sent to the Bozeman campus,
and when he transferred to UM-Western, that institution wanted the same
official transcripts from the out of state campus. Since they are the
same system, Col. Soha wondered why Bozeman couldn’t just forward the
transcripts to Western.